CWC Builders, Inc. v. United Specialty Ins. Co., CIVIL ACTION NO. 13-11576-DPW
| Decision Date | 28 September 2015 |
| Docket Number | CIVIL ACTION NO. 13-11576-DPW |
| Citation | 134 F.Supp.3d 589 |
| Parties | CWC Builders, Inc., Plaintiff, v. United Specialty Insurance Company, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
David M. O'Connor, Kathleen A. Kelley, O'Connor & Associates, P.C., Sudbury, MA, for Plaintiff.
Robert P. Powers, Michael R. Byrne, Melick & Porter, LLP, Boston, MA, for Defendant.
DOUGLAS P. WOODLOCK
This is an insurance dispute between CWC Builders, Inc., the general contractor on a residential construction project in Boston, and United Specialty Insurance Company, the provider of a commercial general liability policy to Walsh Corporation, one of CWC's subcontractors on the project. CWC seeks a defense—for two lawsuits arising from flood damage to neighboring property that occurred during the demolition phase of the project—from United as an additional insured on the policy held by Walsh. CWC and United have filed cross-motions for summary judgment.
1. The Franklin Hill Project and Walsh's Involvement CWC is a Massachusetts corporation that served as the general contractor on a construction project known as the Franklin Hill Revitalization Development (the "Project"). The Project involved demolition of existing Boston Housing Authority residential buildings and the construction of new residential buildings on a property in the Dorchester neighborhood of Boston. In April 2008, CWC contracted with Walsh to perform certain work during phase two of the Project.1
Under the subcontract between CWC and Walsh, Walsh was to "cut and cap utility services," including drain, sewer, and water services, at nine different locations, and "remove and dispose" of certain soils beneath specific buildings. "Cut and cap" involves the disconnection and discontinuation of the use of the utilities. This work was to "include all dust control and street sweeping for all work by [Walsh]" and to "conform to all requirements of Boston Water and Sewer Commission and the Boston Public Works Dep[artment]."
Although it is somewhat unclear the extent to which CWC and Walsh formalized a plan for Walsh to proceed with its work, Patrick Walsh, on behalf of Walsh Corp., asserts that there was initially a plan for sequential work, and that "CWC had a schedule set so that we would start at one building and work our way ... clockwise around the project."2 The plan was for the demolition contractor, NASDI, LLC, to perform some preparatory work at a particular building using the water source from the public main. Walsh would then cut and cap that building. As Walsh finished its cut and cap, the demolition contractor would obtain a demolition permit and start demolition on that particular building. They would repeat the same process with each building, in sequence.
The Project began with work on two buildings that required a cut and cap to be performed from the city street, outside the project bounds. At some point during its work on these two buildings, Walsh learned that "all the copper
piping and the water servicing the buildings had been stolen." As a result, none of the buildings had water to them, which the demolition contractor needed to perform its work.
This lack of a water supply slowed down the schedule and rendered it unnecessary, from Walsh's perspective, for Walsh to go from building to building in order to preserve the water flow to individual buildings during the process. Walsh accordingly proposed a "global cut and cap so [NASDI, the demolition contractor] could obtain all his permits at once." On or about May 12, 2008, Walsh informed CWC and NASDI of its plan to perform a global cut and cap.3 CWC responded by informing Walsh that "the hydrants must be kept live for hazmat demo." Walsh moved ahead with the global cut and cap, which involved discontinuing the main lines that were feeding the Project instead of individually cutting and capping each building. It completed the global cut and cap on or about May 23, 2008.
Although Patrick Walsh contends that Walsh Corp. was not responsible for supplying water to the Project site, he acknowledged that Walsh coordinated with the demolition contractor and CWC to ensure there was an adequate water source. Because water was not available from the water main on the Project site, the demolition contractor pulled water from "the surrounding hydrants outside of the ... Project" using hoses. At some point, Walsh assisted CWC with connecting the hoses to the hydrants to provide water access.
2. The Flooding Incident
There is some dispute as to exactly what happened after Walsh completed the global cut and cap at the Project site. Both parties agree, however, that on June 2, 2008, Walsh returned to the Project at CWC's request to attempt to "reliven" the hydrants that were needed by the demolition contractor. That day, Walsh performed an excavation to locate a valve in the main line that was believed to be in the off position, thereby preventing water from flowing normally to the hydrants. Walsh concluded after locating the valve that the hydrants were not going to receive water regardless of the position of the valve.4 Walsh did not charge CWC for this work and instead described it as a "courtesy call." The parties dispute the precise relationship between Walsh and CWC at the time of Walsh's return to the property.
The next day, on June 3, a flooding incident occurred at a property adjacent to the Project and owned by Avenue Realty Trust ("ART"). The flooding was believed to have been caused by fire hoses on the Project site that were running from public fire hydrants into the basement of one of the Project buildings and were left on after use for dust control at the Project. The property insurer and the trustee for the ART property initiated separate lawsuits—discussed in greater detail below—against CWC and various subcontractors seeking compensation for the property damage that resulted from the flooding.
3. Insurance Policies of Walsh and CWC
Under the subcontract between Walsh and CWC, Walsh was required to purchase and maintain comprehensive general liability insurance in certain amounts,5 and to name CWC as an additional insured "on all liability policies ... throughout the duration of the Project," and for an additional two years after CWC received final payment from the property owner for its completed work.6 The subcontract further requires that the insurance policy obtained by Walsh "shall provide that the insurer shall defend any suit against the Contractor," and contains an indemnification clause requiring Walsh to "provide in the policy of comprehensive general liability insurance ... a contractual indemnity endorsement which insures [Walsh]'s liability under the provisions of [the indemnification paragraph]."
At the time of Walsh's work for CWC, Walsh held a commercial general liability insurance policy (No. GL00043003) from United, effective April 13, 2008 through April 13, 2009 ("United policy"), that is based on the standard Commercial General Liability Coverage form of the Insurance Services Office, an organization that prepares standard form contracts for insurance companies. See Am. Home Assur. Co. v. AGM Marine Contractors, Inc., 467 F.3d 810, 811 (1st Cir.2006)
. Walsh provided CWC with a certificate of liability insurance listing the United policy as a general liability policy, identifying additional automobile and umbrella liability policies, and stating that CWC was "Additional Insured on General Liability, Automobile Liability & Umbrella Liability for work performed by Walsh Corp. on the Franklin Hill Phase Two Demo Project."7 The certificate also states that CWC is an additional insured "on a Primary & Non-Contributory basis," consistent with the clause in the subcontract requiring that "[a]ny insurance policy obtained ... to fulfill the insurance requirements ... shall provide that such insurance shall be deemed primary insurance to any similar insurance [CWC] may obtain for its own benefit, which shall be excess or secondary but not contributing insurance."
Two separate actions were brought on behalf of the adjacent ART property, one by the insurer and one by the trustee, alleging negligence by CWC and/or its subcontractors in causing the water loss that resulted in damage to the ART property.
The first action was filed on October 23, 2009, by Chubb Custom Insurance Company, the property insurer of the ART property at the time the property sustained the flood damage. See Chubb Custom Ins. a/s/o Ave. Realty Tr. v. CWC, Mass. Super. Ct. (Suffolk), Civ. Action No. 2009-4536, 2009 WL 5161425 (Compl. Oct. 23, 2009)
(the "Chubb lawsuit"). Chubb paid $950,000 to ART for damages sustained as a result of the flooding and seeks recovery of these payments from CWC. Chubb alleges that the flooding arose out of the use of hoses connected to fire hydrants for dust control during demolition work at the Project, and that the flood damage was the result of CWC's negligence in supervising its subcontractors.
The second action was filed on February 1, 2010, by William Cranmore, the trustee of ART. See Cranmore, Trustee v. CWC, Mass. Super. Ct. (Suffolk), Civ. Action No. 2010-0403, 2006 WL 3088057 (Compl. Feb. 1, 2010)
. This complaint was amended on December 8, 2010, and names CWC, Walsh, NASDI and other entities as defendants. Cranmore alleges that these defendants provided demolition services and used fire hydrants in performing these services, and that the work at the Project resulted in flood damage to the ART property. The complaint states causes of action for negligence, trespass, nuisance, strict liability, and breach of the duties created by the Massachusetts Tort Claims Act. The Chubb and Cranmore lawsuits have since been consolidated.
CWC tendered defense of the lawsuits to United by way of United's third-party administrator or agent, Aspen...
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